Best Credit Cards for People with Bad Credit
Having bad credit can make it challenging to qualify for credit cards, but several options are designed specifically for individuals looking to rebuild their credit. The right credit card can help you improve your credit score over time while offering some additional perks. Here’s a guide to the best credit cards for people with bad credit.
- Understanding Credit Scores and Their Impact
Before diving into specific credit card options, it’s important to understand how your credit score affects your ability to get a credit card. Credit scores range from 300 to 850, with anything below 580 generally considered bad credit. A low credit score can result from missed payments, high credit card balances, or a limited credit history. Credit cards for bad credit typically have higher interest rates and fewer rewards, but they can be a valuable tool in rebuilding your credit.
- Secured Credit Cards: A Reliable Option for Rebuilding Credit
Secured credit cards are one of the most accessible options for people with bad credit. These cards require a security deposit, which acts as collateral in case you default on payments. Your credit limit is usually equal to your deposit. While secured cards might not offer many perks, they report to all three major credit bureaus, helping you rebuild your credit score as you make on-time payments. Some popular secured credit cards include the Discover it® Secured Credit Card and the Capital One Platinum Secured Credit Card.
- Unsecured Credit Cards for Bad Credit
Unsecured credit cards do not require a security deposit, making them more appealing to some individuals. However, these cards often come with higher interest rates and fees to compensate for the higher risk taken on by the lender. While unsecured cards for bad credit are harder to qualify for than secured cards, options like the Credit One Bank® Platinum Visa® for Rebuilding Credit and the Indigo® Platinum Mastercard® offer decent starting limits and the opportunity to improve your credit score.
- Credit Cards with Low Fees
When you have bad credit, finding a credit card with low fees can be challenging, but it’s not impossible. Many credit cards for bad credit come with high annual fees, maintenance fees, or setup fees. However, cards like the OpenSky® Secured Visa® Credit Card and the Petal® 1 “No Annual Fee” Visa® Credit Card offer low or no annual fees, making them more affordable options for those looking to rebuild their credit without incurring hefty costs.
- Credit Cards with Rewards for Bad Credit
While rewards are typically associated with credit cards for people with good to excellent credit, some options are available for those with bad credit. Cards like the Discover it® Secured Credit Card offer cash back on purchases, even for cardholders with bad credit. This can be an attractive feature, allowing you to earn rewards while rebuilding your credit. However, it’s crucial to focus on responsible credit use, as the rewards may not outweigh the costs if you carry a balance.
- Student Credit Cards: A Path to Building Credit
For students with bad credit or limited credit history, student credit cards can be a good option. These cards are designed for young adults with little to no credit history and often have lower credit requirements. While not all student cards are available to those with bad credit, some options, like the Discover it® Student Cash Back and the Capital One SavorOne Student Cash Rewards Credit Card, offer rewards and benefits tailored to students, making them a solid choice for building credit from scratch.
- Store Credit Cards: A Cautious Choice
Store credit cards, issued by specific retailers, are often easier to qualify for, even if you have bad credit. While these cards can help you build credit, they typically come with high interest rates and can only be used at the issuing store. Examples include the Target REDcard™ and the Amazon Store Card. While these cards can be useful, it’s important to use them responsibly and pay off the balance in full each month to avoid high-interest charges.
- Tips for Using Credit Cards to Rebuild Credit
No matter which credit card you choose, the key to rebuilding your credit is responsible usage. Always pay your bill on time, as payment history is the most significant factor in your credit score. Keep your credit utilization low by not maxing out your credit limit. Consider setting up automatic payments to avoid missing due dates. Additionally, regularly monitor your credit report to track your progress and ensure there are no errors that could be dragging down your score.
Conclusion
Rebuilding your credit takes time and discipline, but choosing the right credit card can make the process smoother. Whether you opt for a secured card, an unsecured card with low fees, or even a student or store credit card, the key is to use the card responsibly. By making on-time payments and keeping your balances low, you can gradually improve your credit score and work your way toward better financial health.